{"id":2730,"date":"2026-08-26T06:58:10","date_gmt":"2026-08-26T06:58:10","guid":{"rendered":"https:\/\/www.waggex.com\/blog\/?p=2730"},"modified":"2026-08-23T07:06:07","modified_gmt":"2026-08-23T07:06:07","slug":"is-pf-mandatory-for-all-employees-india","status":"publish","type":"post","link":"https:\/\/www.waggex.com\/blog\/is-pf-mandatory-for-all-employees-india\/","title":{"rendered":"Is PF Mandatory for All Employees in India? (2026 Rules)"},"content":{"rendered":"

Short answer: no, PF isn\u2019t mandatory for every employee \u2014 but it is mandatory for a large number of employees.<\/b><\/p>\n

If your company has <\/span>20 or more employees<\/b>, it generally comes under the EPF rules. For employees whose basic salary plus dearness allowance is <\/span>\u20b915,000 a month or less<\/b>, PF coverage is generally mandatory. For employees earning above \u20b915,000, PF can be voluntary in certain cases, depending on whether they are new to EPF or already covered.<\/span><\/p>\n

If your company has <\/span>fewer than 20 employees<\/b>, EPF registration is generally not mandatory under the usual coverage threshold, although an employer can opt for voluntary coverage.<\/span><\/p>\n

That\u2019s the basic rule. The confusing part is everything around it. What happens when an employee joins with a salary above \u20b915,000? What if their salary increases after they start contributing? Who counts as an employee for the 20-person threshold? And how much does the employer actually have to contribute?<\/span><\/p>\n

There are also a few exceptions and situations where the usual \u20b915,000 rule doesn\u2019t tell the whole story.<\/span><\/p>\n

This guide breaks it all down in simple terms <\/span>who needs to be covered, who doesn\u2019t, how much the employee and employer contribute, and what has changed in 2026.<\/b><\/p>\n

The Two Thresholds That Determine Everything<\/b><\/h2>\n

Threshold 1 Company size: 20 employees<\/b><\/p>\n

PF registration is mandatory once a company crosses <\/span>20 employees on any day during the year.<\/b> Not on a fixed census date on any day. If you have 19 employees in January and hire one more in March, you’re covered from March. Registration has to happen within one month of crossing the threshold.<\/span><\/p>\n

One thing that catches people off guard: once you cross 20 and register, <\/span>you cannot deregister even if the headcount drops below 20 again.<\/b> The obligation stays.<\/span><\/p>\n

Who counts towards the 20? Everyone, permanent employees, temporary staff, contract workers deployed at your premises, part-timers. The headcount is not limited to full-time salaried employees on the company’s direct rolls.<\/span><\/p>\n

Threshold 2 Salary: \u20b915,000\/month<\/b><\/p>\n

Within a registered company, <\/span>PF enrollment is mandatory for employees earning \u20b915,000 or less per month in basic salary plus dearness allowance.<\/b> This is the wage ceiling under the EPF Scheme, 2026 (which replaced the 1952 scheme effective 29 June 2026 same rule, updated framework).<\/span><\/p>\n

Above \u20b915,000? The employee is classified as an ‘excluded employee’ and PF is not mandatory for them they can opt in voluntarily, jointly with the employer, but neither side is obligated. If they’re already enrolled from a previous job via their UAN, they continue as an existing member, but a fresh joiner above the ceiling doesn’t have to be enrolled.<\/span><\/p>\n

Important: the \u20b915,000 ceiling applies to basic salary + DA only not gross salary, not CTC. An employee earning \u20b940,000 gross but only \u20b912,000 in basic+DA is still mandatory PF-eligible.<\/span><\/i><\/p>\n

What Each Side Actually Pays<\/b><\/h2>\n

The contribution rate is 12% from the employee and 12% from the employer but the employer’s 12% doesn’t go to one place:<\/span><\/p>\n

 <\/p>\n\n\n\n\n\n\n\n\n\n\n
Contribution<\/b><\/th>\nRate<\/b><\/th>\nMonthly Amount (\u20b915K basic)<\/b><\/th>\nWhere It Goes<\/b><\/th>\n<\/tr>\n<\/thead>\n
Employee contribution<\/b><\/td>\n12% of basic + DA<\/span><\/td>\n\u20b91,800<\/span><\/td>\nEPF account (full amount)<\/span><\/td>\n<\/tr>\n
Employer EPS (pension)<\/b><\/td>\n8.33% of basic, capped at \u20b91,250\/mo<\/span><\/td>\n\u20b91,250<\/span><\/td>\nEmployee Pension Scheme<\/span><\/td>\n<\/tr>\n
Employer EPF<\/b><\/td>\n3.67% of basic (balance after EPS)<\/span><\/td>\n\u20b9550<\/span><\/td>\nEPF account<\/span><\/td>\n<\/tr>\n
Employer Admin charge<\/b><\/td>\n0.50% of basic<\/span><\/td>\n\u20b975<\/span><\/td>\nEPFO administration<\/span><\/td>\n<\/tr>\n
Employer EDLI<\/b><\/td>\n0.50% of basic<\/span><\/td>\n\u20b975<\/span><\/td>\nLife insurance cover<\/span><\/td>\n<\/tr>\n
Total employer cost<\/b><\/td>\n~13.5% of basic<\/span><\/td>\n\u20b91,950<\/span><\/td>\nCombined statutory obligation<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

One thing many payroll sheets get wrong:<\/b> the admin charge (0.50%) and EDLI (0.50%) are separate from the employer’s 12% contribution they’re additional. So the true employer cost is around 13.5% of basic, not 12%.<\/span><\/p>\n

The EPS (pension) contribution is capped at \u20b91,250\/month regardless of actual basic salary. Even if basic is \u20b950,000, EPS gets \u20b91,250. The remaining employer 12% after EPS goes into the EPF account.<\/span><\/i><\/p>\n

The 2026 Update What Changed<\/b><\/h2>\n

The EPF Scheme, 2026 published in the Gazette of India (G.S.R. 525(E)) on 29 June 2026 replaced the old 1952 scheme. The core rules are the same, but two things are now more clearly stated:<\/span><\/p>\n